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Friday, September 29, 2006

Today's GAO Reports

The Government Accountability Office (GAO) today released the following report:

Grants Management:
Enhancing Performance Accountability Provisions Could Lead to Better Results.
GAO-06-1046, September 29.
Highlights - http://www.gao.gov/highlights/d061046high.pdf

Auditors: ICE financial management a work in progress

"Homeland Security Department auditors released a report Wednesday calling for continued improvements to financial management and reporting at the Immigration and Customs Enforcement bureau and the Coast Guard.

The review, conducted by accounting firm KPMG for the DHS inspector general, stated that vague criteria for spending oversight need to be re-evaluated and fine-tuned.
ICE's management has had "abnormal balances" and problems with "accurate and timely submission of financial reports," the report stated. Safeguards designed to issue warnings when erroneous data is submitted are not adequately monitored

But there also were indications that the agency -- which previously has been the target of criticism over financial problems, including budget shortfalls -- has made progress, the report said.

"The leadership provided by the ICE [chief financial officer] in setting a positive 'tone-at-the-top' and actively monitoring ICE's progress ... has shown to be integral to the success achieved at ICE thus far," the report stated. The bureau got its first permanent financial chief in January.


OMB should test agency financial management compliance

"The Office of Management and Budget and the Government Accountability Office continue to disagree over how much assurance is necessary to determine compliance with federal financial management regulations.

GAO reaffirmed prior recommendations that OMB require agencies to provide positive assurance through comprehensive testing that they comply with the Federal Financial Management Improvement Act. OMB also should clarify the meaning of substantial compliance. [GAO-06-970]

As in the past, OMB disagreed with GAO’s view on auditors providing positive assurance but said it would consider defining substantial compliance in future policy and guidance updates.

Although 19 of 24 major agencies received unqualified opinions on their fiscal 2005 financial statements, the number of agencies that did not substantially comply with federal financial management requirements has remained fairly constant, GAO said.

Agencies have made improvements, but many agencies’ financial management systems are still not able to routinely produce reliable, useful and timely financial information.

“We continue to be concerned that the full nature and scope of the problems have not yet been identified, because most auditors have only provided negative assurance in their FFMIA report,” said comptroller general David Walker in the report released today.

GAO views the continuing lack of compliance with FFMIA and the associated problems with agency financial systems to be significant challenges to improving the management of the federal government


ACT-IAC Recognized by Federal Computer Week

[ACT-IAC's] continuing efforts in support of our mission of leading the IT community to improve government were recently recognized in Federal Computer Week’s annual “List” issue – The American Council for Technology and Industry Advisory Council were number one on the list of “Six Organizations that can Make a Difference.” The organization was also number one on the list of “Seven Business Groups to Consider Joining.”

The articles can be viewed at
http://www.fcw.com/article95854-09-04-06-Print and

ACT-IAC has formed a sub-committee on Federal Financial Management within the Collaboration & Transformation Significant Interest Group (SIG). Fore more information see: http://www.actgov.org

ACT-IAC's annual Executive Leadership Conference takes place this October29th - 31st in Colonial Willamsburg, VA. For more information see: http://www.actgov.org/actiac/documents/ELC/ELC2006Tracks.doc

Thursday, September 28, 2006

FederalNewsRadio - Ask the CFO - Carla Burzyk (USGS) Part 2 of 2

  • Making it work -- one project and dozens of partners
  • The importance of funding the PR machine
  • Making sure you're not a financial victim of your own success

Listen with Windows Media Player

Wednesday, September 27, 2006

OMB enlists bloggers' aid in pushing management agenda

"OMB Deputy Director for Management Clay Johnson met with a group of bloggers Tuesday after President Bush signed the Federal Funding Accountability and Transparency Act at the White House. The act, passed by the House and Senate on Sept. 13, mandates the creation of a Web site tracking hundreds of billions of dollars in federal contract and grant spending.


Tuesday, September 26, 2006

Fact Sheet: Achieving Greater Transparency and Accountability in Government

Today, President Bush Signed The Federal Funding Accountability And Transparency Act Of 2006 To Improve The Quality And Accessibility Of Information About Federal Spending.

This legislation calls on the Office of Management and Budget to oversee a new website through which the public can readily access information about grants and contracts provided by Federal government agencies, except for those classified for national security reasons.


Today's GAO Reports

The Government Accountability Office (GAO) today released the following report:

Financial Management:
Improvements Under Way but Serious Financial Systems Problems Persist.
GAO-06-970, September 26.
Highlights - http://www.gao.gov/highlights/d06970high.pdf

Feds getting comfortable with SOA

"Federal agency program managers and other IT professionals are becoming well-acquainted with the concept of service-oriented architecture, even in cases where they are not using the methodology, according to a report issued yesterday by a coalition of SOA product and service vendors.

“We're starting to see that decision makers are starting to feel that choosing SOA is a safe decision, as opposed to feeling they are the first to foray into the technology,” said Mark Zalubas, chief technology officer for Merlin International Inc. of Englewood, Col. Merlin leads the Merlin Federal SOA Coalition, which includes AmberPoint Inc. of Oakland, Calif., BEA Systems Inc. of San Jose, Calif., and Systinet Corp. of Burlington, Mass.

The study, titled SOA What? – Who and What Is Driving SOA Adoption in the Federal Government?, conducted in July, was filled out by 196 federal IT specialists and managers last July. Fifty-six percent of the respondents agreed that SOA would benefit their agencies, even though only 22 percent reported successful SOA implementations in their own agencies.

“That was probably one of the big surprises in the study,” Zalubas noted. “The success rate is not extremely high, but the [respondents'] ability to recommend it to others is very high. So they are seeing something in the technology that could be very useful.”

Actually, only 17 percent of the respondents noted that they were involved in SOA implementations, and the vast majority of these implementations are taking place in civilian agencies. (The report did note that the Defense Information Systems Agency plans to release an RFP for an agencywide SOA soon). Of the possible uses of SOA, more than half of the respondents recognized it as a way to fuse discrete systems.

Last month, the Organization for the Advancement of Structured Information Standards defined SOA as “a paradigm for organizing and utilizing distributed capabilities that may be under the control of different ownership domains,” according to a recently OASIS-issued reference model for SOA. "

Millions in Iraq contracts awarded to 'dummy vendor'

"A review of Iraq reconstruction funding revealed that 96 contracts worth $362 million were obligated for payment to 'Dummy Vendor,' as opposed to a legitimate supplier.

The Special Inspector General for Iraq Reconstruction discovered the contract entries in the Army Corps of Engineers' financial management system during a review of agreements signed under the Iraq Relief and Reconstruction Fund 2, a three-year appropriation that expires Sept. 30. Officials with the IG office determined that the contracts were not properly obligated and will be lost at the end of the month.

In discussions with Army Corps financial managers, investigators learned that the vendor name was used in the contracting system to allow the entry of data where a specific vendor did not exist. That field has since been modified so that Dummy Vendor is not allowed as an entry, they said.

'We do not believe in using this term there was any attempt to mislead on the true status of obligations,' the investigators wrote in their report, SIGIR-06-037. The obligations were recorded between November 2004 and August 2006, and none have been used for actual disbursements.

The funds were obligated by the Army Corps' Gulf region division project and contracting office in five categories: contingency; design/build program close out; public works center costs; supervision and administration; and claims and unknown.

Investigators recommended that the Army Corps either act immediately to obligate the funds properly or seek to have them extended legally. But the Army Corps chief financial officer responded last week that the contracting office would be advised to deobligate the funds afunds, the money would be available for five fiscal years for in-scope modifications, contract close-out and cost overruns. As expired funds, the money would be available for five fiscal years for in-scope modifications, contract close-out and cost overruns.


Guidelines for financial consolidation draw fire

"Recently released final planning guidance for the Bush administration's effort to consolidate agency financial management systems has generated opposition from a labor union and skepticism from congressional overseers.

The union's concerns center on the instructions for agencies that opt to outsource their financial systems to the private sector. Congressional overseers are concerned that the final guidance, while an improvement over previous editions, lacks clarity.

The effort is part of the Office of Management and Budget's broader lines of business project to streamline IT systems. The final guidelines for financial management systems came out last week.
The American Federation of Government Employees called the guidelines anti-competitive and said they violate 2003 revisions to Circular A-76, the rule book agencies use when they open federal jobs to bids from the private sector.

Agencies that want to change or upgrade their financial management systems now must, with limited exceptions, either move to an agency-run shared service provider or to a qualified private sector provider.

OMB selected four federal agencies as financial management service providers in February 2005. To select a private sector provider in lieu of one of the federal options, agencies must put the companies through a competitive process.

Under last week's final rules, agencies must use Circular A-76 to govern that competitive process when the work is performed by more than 10 full-time federal employees. In situations with fewer than 10 full-time employees, agencies must still conduct a public-private competition, but they do not have to adhere to A-76 rules. OMB can grant exceptions to these requirements.

Union officials said the guidance will allow contractors to take work away from federal employees without conducting fair public-private competitions.

John Threlkeld, legislative representative for the American Federation of Government Employees, said the guidance contradicts OMB's public-private competition rules by failing to require that agencies follow Circular A-76 for activities involving 10 or fewer full-time employees.


Monday, September 25, 2006

IT consolidation brings benefits challenges

"Federal IT managers recognize the importance and potential benefits of infrastructure consolidation, but are concerned about giving up control of their systems.

In a new survey of 101 federal IT workers by Mercury Interactive Corp. of Sunnyvale, Calif., 59 percent said IT consolidation was important or very important to their agency, and 70 percent said their agency could benefit from consolidating their infrastructure.

The reasons for consolidation, according to the respondents, are potential for cost savings (59 percent), federal mandates (50 percent) and the ability to reduce redundancies (42 percent).

With federal mandates such as the Office of Management and Budget’s Lines of Business Consolidation initiatives and Homeland Security Presidential Directive-12, 55 percent of those surveyed said their biggest concern was loss of control. The fear of a slow application or poor performance also worried 51 percent of the respondents. Respondents were told to mark all the answers that apply, which is the reason the percentages total more than 100.

“When you look at the dynamics of going through a consolidation, what is underlying in all of these metrics is the risk, and it manifests in different ways,” said Simon Berman, senior director for product marketing for Mercury. “Agencies are worried about providing the service to the user, and poor performance or slow applications are big risks.”

IT managers also agreed that the inability to get an independent third party to verify the application’s performance, the lack of visibility into the consolidation process, and the ability to maintain application availability and performance were the three biggest challenges.

Fifty percent of the respondents said the cross-agency initiatives were the biggest challenges they face, while 47 percent said the business and culture changes were.

“It is the fear of uncertainty,” Berman said. “Not only does IT have internal challenges, but external ones as well. For many of the employees, they are going through these consolidation efforts for the first time, and people are generally unsure what this means from an organizational standpoint for them personally.”

Financial line of business still too murky

"Federal officials have released the final version of guidance for the Financial Management Line of Business initiative, but some of the policy-makers and analysts who are expected to interpret and use it say it contains too many gray areas.

“The federal landscape is littered with examples of great technological and business solutions that failed to deliver the expected and promised results because the government requirements process itself was unclear and/or constantly shifting,” said Stan Soloway, president of the Professional Services Council, at a hearing on the initiative.

The Office of Management and Budget and the General Services Administration’s Financial Systems Integration Office (FSIO) issued the guidance Sept. 18. The Financial Management Line of Business Migration Planning Guidance is designed to help agencies as they move their financial management systems to shared service providers. A draft version was released March 15.

“The migration planning guidance is an important step toward establishing increased transparency that will foster efficiencies in federal financial systems and operations,” said Daniel Werfel, OMB’s deputy comptroller.

The initiative aims to reduce duplicative financial programs. Some agencies will be designated shared service providers and will handle financial management for other agencies. Some agencies may choose to contract with private-sector companies instead.

The intent is to allow most agencies to dispense with the details of running the systems so they can dedicate their resources to pursuing their core missions.

The guidance describes in detail various aspects of the migration, such as the elements of a service-level agreement and the requirements that all shared service providers must follow.

It gives an overview of how to measure performance and offers best practices for managing the changes within an organization as it shifts to a shared provider.

The guidance directs agencies that plan to move their operations to hold a competition for the work that complies with OMB Circular A-76.

The agency also must track the performance of the chosen provider, according to the document.
But some elements are missing. For example, the guidance states that details on the reporting requirements for the performance measures will appear in a future version.

The guidance further states that future versions will include, among other things, rules on evaluating shared service providers and arbitrating disputes over bids and contracts.
Later versions also will address principles for developing federal shared service provider and commercial partnership agreements, according to the document.

Rep. Todd Platts (R-Pa.), chairman of the House Government Reform Committee’s Government Management, Finance and Accountability Subcommittee, said he is pleased that OMB is addressing issues about the initiative. His subcommittee has held several hearings on the topic.
Platts said agencies will benefit from OMB’s clarifications on A-76 rules, especially regarding Most Efficient Organizations joining the competition with private-sector providers.

He also said the guide’s details about service-level agreements were necessary, because agencies are already moving forward on them. Several agencies have signed agreements to send their financial management work to the private sector.

“We do have a long way to go, however, and some of the key stumbling blocks have yet to be addressed,” Platts said.

Agencies are modernizing their financial management systems now, and although they should be moving the work to shared service providers, they are not, as the subcommittee learned at its June hearing.

The Small Business Administration and the Labor Department have outsourced their financial management duties to private companies — Corio and Oracle, respectively.

However, Linda Combs, controller of OMB’s Federal Financial Management Office, said neither company has been deemed an official shared service provider.

Combs said the initiative is evolving, and OMB is ironing out the details. In a memo accompanying the guide, she wrote that officials are still evaluating the policies."

DHS VA have riskiest IT investments projects

"The departments of Homeland Security and Veterans Affairs, respectively, have the most investments and projects on the Office of Management and Budget’s management watch list and high-risk watch list.

OMB, which posted the lists publicly for the first time late last evening, is using the lists to make sure senior management pay close attention to high-risk investments and projects.

The management watch list is drawn from agency business cases and focus on overall investments. The high-risk list focuses on specific projects. There could be several projects in an investment, and some or all would make the high-risk list.

DHS has 50 investments on the management watch list. Some of them, such as the Homeland Security Information Network and the Transportation Security Administration’s operating environment, are going poorly, while others such as Safecom, Disaster Management and the U.S. Visitor and Immigrant Status Indicator Technology system are going well.

VA has 33 investments on the high-risk list, including their HealtheVet Vista modernization patient records program and their financial-management system.

Overall, the management list has 86 investments worth almost $4.5 billion from six agencies, while the high-risk list has 216 projects from 26 agencies.

DHS also has 16 projects on the high-risk list, as does NASA. The Small Business Administration is second behind VA with 22 projects, while the Office of Personnel Management has 15 projects, and the Transportation Department has 13.

Karen Evans, OMB administrator for e-government and IT, said yesterday that every e-government project and Line of Business Consolidation initiative also are on the high-risk list, not because they are not going well, but because they have a lot of risk involved.

“If an agency has a project on the high-risk list, the agency is not failing,” she said. “Things happen in a project that you have make sure senior leadership is aware of. These are complex projects that have a huge ripple effect across government. They are high-risk but well-managed projects."

Friday, September 22, 2006

Today's GAO Correspondence

The Government Accountability Office (GAO) today released the following correspondence:

Managerial Cost Accounting Practices:

Department of Agriculture and
Department of Housing and Urban Development.
GAO-06-1002R, September 21.

Thursday, September 21, 2006

The Promise of Transparency

"One of the underlying strengths of the U.S. economy - and perhaps its most vital lesson amid world economies - is the important role transparency plays in the marketplace.

You don't need to be an economist to recognize that investment capital flows wherever in the world it is most welcome relative to the risk.

There are many reasons why the U.S. remains so attractive to capital: The Great Depression, for one, prompted many new governmental safeguards for investors.

There's the spirit and agility of our people, who continually reinvent the enterprises that drive our economy. And there's a history of commitment to an open marketplace, protected by the rule of law, however flawed, that has yielded superior returns.

That's not to ignore to a growing unease. Many believe those advantages may be waning. And the headlines and lessons that wrought Sarbanes-Oxley remind us that transparency and reliability are two different things. Still, the correlation between transparency and investor confidence in the U.S. - and the associated economic vitality they foster - compared to markets elsewhere in the world is hard to ignore.

That lesson, in part, is what makes the transparency of ExpectMore.gov one of the most intriguing, if not significant, management experiments to come out of government in many years.

The Web site, launched last February by the Office of Management and Budget, hasn't gotten much attention since its debut. And it has its detractors. Yet ExpectMore.gov deserves credit for opening a new chapter on governance in the Internet Age.

The site publishes the performance ratings and operating plans for some 800 federally financed programs - including many that scored failing marks - for the entire world to see. This kind of public self-assessment is practically unheard-of in the private. Competition would make disclosing such information akin to giving away military secrets. Even in government circles, the site’s sweeping portrait of how effectively taxpayers’ dollars are being put to work—and in some cases, being wasted—is striking.

ExpectMore.gov clearly has an agenda. Public disclosure of the administration’s Program Assessment Ratings Tool scores gives OMB new leverage in holding agency officials accountable for the programs they manage. It also shines a public spotlight on some of the misguided and ineffective programs born over the years from the froth of congressional politics.

While the PART system isn’t perfect, the questions it asks program leaders to address are nevertheless fair and reasonable: Is a program’s purpose clear? Is it designed to achieve its objectives? Are valid plans in place? Is the program being managed responsibly and within budget? And are the results headed in the right direction?

That the answers are now available for all to see offers a new and potent tool to help manage an often-unruly collection of competing federal programs. It also adds a new dimension to the principle of checks and balances between the executive branch and Congress in the Internet age.

It’s hard not to imagine that the nation’s Founding Fathers would be pleased, if not intrigued, by ExpectMore.gov as an instrument that supports the precept of government by the people, for the people. "

FederalNewsRadio - Ask the CFO - Carla Burzyk (USGS) Part 1 of 2

  • Budgeting for potential disasters
  • Managing money from the top down and the bottom up at the same time
  • What it means when you have information for sale

Listen with Windows Media Player

Spires takes CIO role at IRS

"Richard Spires is the Internal Revenue Service's new chief information officer, Commissioner Mark Everson announced today. His appointment was effective Sept. 17.

Spires, a private-sector information technology executive before joining the IRS in early 2004, will be responsible for almost all aspects of the IRS' IT systems, including its critical modernization program, according to the agency.

'Richard has been an important contributor to the significant progress we've made over the past few years in our modernization efforts,' Everson said. 'In particular, he successfully spearheaded our program that mandates the electronic filing of tax returns by large corporations and nonprofits.'

Spires served most recently as associate CIO for applications development. He has had responsibility for more than 400 electronic systems within the IRS that support tax administration. Spires has also led projects within the Business Systems Modernization program.

He helped develop the agency's Modernization Vision and Strategy and its associated five-year plan for IT development.
From 2000 to mid-2003, Spires served as the president, chief operating officer and a director of Mantas, a software product vendor.

Spires received bachelor's degrees in electrical engineering and mathematical sciences from the University of Cincinnati. He also holds a master's degree in electrical engineering from George Washington University."

Panels suggest new approach to IT consolidation

"Governmentwide task forces assigned to review opportunities to consolidate three additional categories of federal information technology systems have made recommendations that mark a departure from efforts undertaken so far as part of the Bush administration's lines of business initiative.

The task forces, launched by the Office of Management and Budget earlier this year, are recommending the adoption of uniform governmentwide standards in the three new areas, rather than the creation of more shared service centers, government officials close to the matter told Government Executive.

The service center concept has been the main focus of OMB's other attempts at IT consolidation through its lines of business initiatives. This approach is being used to streamline financial management and human resources systems, for example.

One government official, who requested anonymity, said the task forces are simply recommending actions that conform to the reality of the new types of systems being considered for consolidation. These are budget formulation and evaluation systems, geospatial information systems and IT infrastructure.

Other officials disagreed. "I think it's a realization that Congress would never allow it to happen and the agencies don't want to fight that battle," said another government official, who also requested anonymity.

The recommendations from the three latest lines of business task forces state that a new set of standards would maintain consistency among agencies' backend IT infrastructures. This would allow for better performance data and targeting of savings, officials said.

"The idea [of] creating a shared service center ... doesn't work in every case," said the first government official.
OMB has yet to decide whether it will adopt the recommendations, officials said.

OMB has yet to decide whether it will adopt the recommendations, officials said. "

Wednesday, September 20, 2006

Agencies to work lines of business into EAs

"With the Office of Management and Budget pushing agencies to focus on core mission needs, enterprise architects and business managers will be expected over the next year to develop modernization blueprints for their specific lines of business instead of looking to modernize back-office functions.
Dick Burk, OMB's chief architect, said his office will release segment architecture guidance by mid-October to help agencies develop baseline and target architectures for mission-critical lines of business. The segment architecture is one of three objectives OMB is focusing on over the next year.
Burk said his office will release several other documents in support of the objectives, which include incorporating cross-agency initiatives, such as the move to IP version 6, in the agency's EA, and developing and implementing better metrics to quantify the success of agency blueprints.

OMB will issue Federal Transition Framework Version 1.0 by the end of September. The White House issued the draft version of FTF in July. The framework gives agencies a standard way of describing cross-agency initiatives and makes the sharing of that information easier.

OMB officials are asking agencies, beginning with the fiscal 2009 budget submission, to adhere to a more structured way of characterizing governmentwide projects that can be mapped to the Federal Enterprise Architecture reference models.

Burk, at an EA conference earlier this month in Washington, said the updated FTF would include 17 cross-agency initiatives, including Homeland Security Presidential Directive-12, IPv6 and the Line of Business Consolidation initiatives.

'We want agencies to bake the cross-agency initiatives into their EAs,' he said.

OMB also this month will issue EA Assessment Version 2.1 to incorporate agencies’ implementation of cross-agency projects and improved measures to determine success.

While OMB is busy this fall, the CIO Council’s Architecture and Infrastructure Data Subcommittee will be identifying standards and conventions across the government to make data reuse easier, said Charles Havekost, co-chairman of the full committee and Health and Human Services Department CIO.

The services subcommittee also will focus on how to make service reuse easier. “We need to make a lot of headway in those two areas,” Havekost said. “There is a lot of public information available, and if you put it together, you will get more value."

Tuesday, September 19, 2006

FCW.com - GSA, OMB issue guidance on financial management

"Agency officials uncertain about how to proceed with the Financial Management Line of Business now have a guide. The Office of Management and Budget and the General Services Administration have released the first version of the Financial Management Line of Business Migration Planning Guidance.

The financial management initiative is intended to cut down on duplicative financial programs by consolidating them in Centers of Excellence or shared service providers. Each provider would handle financial management for several agencies, giving those agencies more time to attend to their core missions.

The planning guide will reduce the cost and improve the quality and performance of financial management systems, according to a GSA press release. The guidance is available at the Financial Systems Integration Office's (FSIO) Web site.

Policy-makers have said agencies needed a clear understanding of the new business line, which has many gray areas. The guide gives agencies performance measures and other tools to close performance gaps in core financial systems.

'The migration planning guidance is an important step toward establishing increased transparency that will foster efficiencies in federal financial systems and operations,' said Daniel Werfel, OMB's deputy comptroller.

Mary Mitchell, deputy associate administrator of GSA's Office of Technology Strategy and FSIO executive, said she encourages the financial management community to make suggestions and recommendations for improving the guidance."

OMB finalizes FMLOB migration guidance

"The Office of Management and Budget and General Services Administration have finalized, for the time being, long-awaited guidance to help agencies assess whether they should turn over control of their financial-management systems to a shared-services provider.

OMB and GSA officials said guidance will always be a work in progress, but that it gives agencies a starting point for determining how to move forward.

'The migration planning guidance is an important step toward establishing increased transparency that will foster efficiencies in federal financial systems and operations,' OMB deputy comptroller Daniel Werfel said.

The guidance comes almost five months after OMB in May issued draft guidelines for the Financial Management Line of Business, which drew criticism from certain lawmakers who felt more clarity was needed.

Mary Mitchell, GSA deputy associate administrator and FM LOB program manager, said the administration considered the more than 750 comments on the draft version, and while a handful of policy issues remain under consideration, the final guidance is thorough enough for agencies to begin their analyses.

'The guidance addresses the vast majority of comments received', particularly those related to clarity and improvements of the tools provided herein,' she said in an accompanying letter.

The crux of the document remains the same: Agencies planning to replace or substantially change their financial-management systems must, with limited exceptions, turn over their financial operations to a shared-services provider, or become one themselves. Agencies can also sign up with a private provider, so long as the firm meets certain requirements. "

Monday, September 18, 2006

Version 1.0 Migration Planning Guidance Released

"WASHINGTON, Sept. 15 /PRNewswire/ -- The U.S. General Services Administration's Financial Systems Integration Office (FSIO) today released Version 1.0 of the Financial Management Line of Business Migration Planning Guidance (MPG) to improve the cost, quality, and performance of financial management systems. The Guidance is available at http://www.fsio.gov.

The Guidance represents a collaborative effort by FSIO, the Office of Management and Budget (OMB), and the Federal financial management community. An essential building block in the Financial Management Line of Business identified in the Presidential Initiative for Financial Management, this Guidance supports the Financial Management Line of Business. This approach leverages shared service providers and implements other government-wide reforms that foster greater efficiencies in Federal financial systems and operations. The release provides performance measures, OMB guidance and other tools that will assist agencies in closing the performance gaps in their core financial system operations.

"The Migration Planning Guidance is an important step toward establishing increased transparency that will foster efficiencies in Federal financial systems and operations," said Daniel I. Werfel, OMB's Deputy Comptroller. Mary Mitchell, GSA's Deputy Associate Administrator, Office of Technology Strategy, and FSIO Executive added, "Both agencies and private-sector members of the Federal financial management community contributed to the development of the Guidance, and we encourage the community to continue to submit suggestions and recommendations for further improvements to the Guidance".

Questions about the Migration Planning Guidance should be directed to FSIO@gsa.gov.

GSA is a centralized, federal procurement, property management, policy development and information provision agency, created by Congress to improve government efficiency and help federal agencies better serve the public. In this role, GSA acquires products and services on behalf of federal agencies; plays a key role in developing and implementing government-wide policies; provides services and solutions for the office operations of more than one million federal workers; and encourages a citizen-centric relationship with government by providing a single "point of entry" to the information and services citizens need in a timeframe they can appreciate. This allows citizens to receive accurate, timely and consistent answers and information, and helps Federal agencies better respond to citizen inquiries.

Source: U.S. General Services Administration"

Six Trends Transforming Government

"Description: Since 1998, the IBM center for The Business of Government has been studying the substantial changes that are under way at all levels of government within the United States and in other nations across the world. These changes are being driven by a series of new imperatives in the United States. Fortunately, there is now a set of trends that seems to be responding to these imperatives and is leading to more results-oriented government. These trends, often in combination with one another, make it more likely that government will be able to successfully respond to the ever-increasing and complex challenges it faces today and will continue to face in the future.

Download the report (Adobe required)"

Dollar Wranglers

"Here's how to keep hold of the budget reins on that IT project.

Managing the budget for an information technology project can be a bit like herding cattle - especially if the project starts to go over budget.

At a time when agencies must provide Exhibit 300s annually to the Office of Management and Budget to justify and assure funding for their IT projects, it's more important than ever to deploy hands-on management techniques to make sure tasks run smoothly and minimize cost variances. The real trick is to eliminate budget overruns before they cause major problems.

Fortunately, project managers can create metrics to track budgets against missions, strategies and goals. Feds on the front lines and management experts point to numerous prescriptive actions - setting baseline requirements tied to end-user needs, using earned value management, working closely with staff members and monitoring costs at regular intervals - that managers can use to keep a tight rein on projects and avoid budget-busting consequences.

Ultimately, budget management is a balancing act. Keeping projects on budget and on track is important, but it's equally important that the project provides value to the end user. "When program managers mainly focus on keeping IT budgets on track, they risk losing sight of the value-generating reasons why projects and programs were chartered," says Randy Englund, a project management executive consultant and author. "This happens when people skip over or assume there is consensus on discussions aimed at achieving clarity about objectives and value drivers."

If an IT project starts to go over budget, he adds, "check to ensure that the values are still present to justify continuing. Needs for the project may have changed, and so it should, too." A thorough understanding throughout the process of the intended accomplishments can help prevent cost overruns and revisions later on.

Although earned value management — a method for tracking a project's milestones against changes and costs — can help keep tabs on the elements of large projects, Thompson says, it is important to build room for adjustment into a schedule early on. "If one goes through a frank discussion of what can go wrong and what might be encountered, and look at those risks, and look at what those might mean in terms of costs, you can get funded in a way that allows you to deal with those contingencies," he says.

EVM can give a project manager insight into trends and the status of a particular project, but ultimately it's a combination of strategies — including regular meetings and updates, putting the product in front of the end user from early in the development process and keeping track of project values and goals — that will determine whether an IT project comes in on time and at the right cost. "

GAO: Reform IGs’ faulty pay system

"The pay structure for inspectors general is faulty and needs to be reformed to attract the best candidates, a panel of experts convened in May by the Government Accountability Office concluded.

IGs' salaries are capped at $143,000, when they reach the rank of Executive Schedule Level IV. What's more, IGs are forbidden from receiving annual bonuses to avoid any appearance of a conflict of interest.

But Senior Executive Service employees who work under IGs do receive cash awards or bonuses, and their annual pay can sometimes reach $212,000, which is the vice president's salary.

This means that assistant IGs would have their pay cut if they were promoted, and as a result are happy to stay where they are, GAO said in a September report summarizing the panel's findings and opinions. The 43 members of the panel - including Comptroller General David Walker, Office of Personnel Management Director Linda Springer, former IGs, academics and congressional staffers - said further studies are needed to decide whether IGs should be part of the Senior Executive Service and how they should be evaluated.

IGs are appointed either by the president or by an agency head or other designated official. OPM is studying the pay situation for presidentially appointed IGs. And a bill introduced last year by Rep. Jim Cooper, D-Tenn., would give IGs appointed by agency heads salaries comparable to those agencies’ senior staff members. That bill, HR 2489, has yet to be considered by the House Government Reform Committee."

DHS scuttles Emerge2 program

"The Homeland Security Department has halted all activities under the once-vaunted Emerge2 project, which began as $229 million effort to build one enterprise resource management system across the department and later morphed to a series of planned financial-system migration projects.

DHS financial officials will now suspend all their major financial-system upgrade work while senior management studies the problem.

The department's chief financial officer, David Norquist, told the House Government Reform Subcommittee on Government Management, Finance and Accountability yesterday that, 'With respect to our systems-modernization efforts, let me state that Emerge2 is dead.'

Like other department officials, he declined to fully explain why the project - officially titled the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency program - to build a new ERP system had been abandoned and changed to an approach under which DHS' various components would migrate their financial work to one of several ERP programs, both inside and outside the department, deemed efficient.

Norquist noted that the Emerge2 documentation set out the right goals, but that 'the problem is that success in all these areas - from consolidated financial reporting to internal controls to the standardization of policies and processes was all wrapped around the implementation of a new system. The approach was not balanced enough across the framework of people, policies, processes, systems and assurance - it was too heavily weighted on systems transformation to lead changes in the other areas. So as our signature systems effort struggled, progress along many other related fronts also struggled.'

Norquist acknowledged that DHS' financial systems remain troubled in that some are aging, others don’t meet user requirements and some systems aren’t integrated across the functions of finance, procurement and asset management.

He noted that after DHS ended the first phase of Emerge2, the department set out to shift its problematic financial systems to efficient, modern ones run by centers of excellence inside and outside DHS.

“While DHS had discussed beginning a series of systems migrations this year, I am not going to undertake this approach until I know that the benefits will outweigh the costs. Migrations can be costly and risky. Migrations take time and effort, and are disruptive. Before we begin making migrations, we must have a solid business case and know how the migrations tie into our longer-range plans,” he told the subcommittee.

Norquist said he plans to combine information from past reviews of the department’s systems with additional analysis to provide an assessment of which DHS financial systems can be improved to meet basic standards with modest changes. He said he expects to use those systems to replace other financial projects that don’t meet minimal standards.

“The good news about all this is that they spent only [less than $20 million] on Emerge2 [in the first phase], while the FBI spent more than $100 million on the failed Virtual Case File project and the [Federal Aviation Administration] spent hundreds of millions of dollars on systems that they later abandoned. DHS pulled the plug early,” said James Lewis, director of the technology and public policy program at the Center for Strategic and International Studies in Washington.

“At an agency like DHS where people still introduce themselves by saingy they are from their legacy agency, you have to do things that move them toward a single agency and this is one of those things,” Lewis added.

Estimates of Emerge2’s final costs have ranged from $9 million to $18 million. Last year, DHS officials stated that some of the work done by the original Emerge2 contractor, BearingPoint Inc. of McLean, Va., would be useful in taking the project forward after the department ended the vendor’s work in December.

The department has never offered a detailed explanation of why the Emerge2 project failed, but some procurement officials have suggested that responsibility for the project’s failure was due partly to actions by DHS and partly to BearingPoint’s activities.

“In Norquist’s defense, he is stopping and trying to figure out where all the pieces are and how to fit them together,” Lewis said. “If he can carry out his plan, we may see a consolidation plan six months from now on a smaller scale.”

The program was also known as Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency, or sometimes as Submerge2. "

Finance center to shift data from New Orleans to Denver (9/15/06)

"The threat of cataclysmic hurricanes coinciding with the end the government's fiscal year has prompted the Agriculture Department's National Finance Center to move its data processing hardware from New Orleans to Denver.

The hardware was at the center's New Orleans headquarters until Hurricane Katrina forced the agency to move it to Philadelphia temporarily. The permanent relocation is scheduled for the spring, and will cost about $12 million, said Jerry Lohfink, the center's director.

Only about a dozen employees will be needed to manage the new information technology operation at the Denver Financial Center. There are no plans to require workers in New Orleans to move to Denver, Lohfink said. Those in New Orleans will have remote access to information from Denver.

The move was prompted by concerns about maintaining continuity of operations when computer hardware is housed in areas at a high risk for natural disasters.

NFC is one the largest employers in New Orleans, with more than 1,300 employees. It serves the payroll and human resources needs of about 585,000 federal employees at various of agencies.

The agency began the process of identifying an alternative site for its data processing hardware in 2005 after a continuity of operations review recommended the step. A damage assessment conducted after Hurricane Katrina confirmed the need for a long-term location outside the hurricane-prone area, Lohfink said.

'A risk profile showed that our data processing centers were at hurricane risk right at the end of the fiscal season,' he said. 'We decided that Denver was the best alternative. Every now and then they get a little bit of snow.' "

GSA official: Revolving funds merger will help offset losses (9/15/06)

"The General Services Administration anticipates that congressional permission to merge its two revolving funds will help ensure that financial shortfalls do not occur during the next fiscal year, a top agency official said Friday.

Congress is close to approving a bill (H.R.2066) that would combine the Federal Technology Service and Federal Supply Service revolving funds into a Federal Acquisition Service fund - a step in an ongoing agency reorganization. House members could approve a modified Senate version before the House's target adjournment day of Oct. 6, according to a House staff member.

With the two funds combined, the agency would be able to use FSS-generated surpluses to cover FTS losses, said Jim Williams, commissioner of FAS. "

Friday, September 15, 2006

New CFO at DHS puts halt to system consolidation plan

"The Homeland Security Department's new chief financial officer is putting the brakes on plans to merge the agency's eight financial management systems until further studies are done.

Homeland Security has had a problem with accounting and other budget-tracking functions since its 2003 inception. The department had planned to move underperforming agencies to better-performing systems by fiscal 2007, cutting the number of systems in half. Former CFO Andrew Maner began moving toward system consolidation early in 2006, after the previous program - which sought to create a single departmentwide financial management system called eMerge2 - failed after costing $18 million.

But David Norquist, who was confirmed as CFO in May, told the House Government Reform subcommittee on government management, finance and accountability that the plan to halve the number of systems would be disruptive and time-consuming, and he is not sure whether it is the right approach.
'I am not going to undertake this approach until I know that the benefits will outweigh the costs,' Norquist said Sept. 13.

Norquist said his office will review Homeland Security’s systems during the next few months and — if the system consolidation still looks like a good idea — create a business case that ties them into longer-range plans.

Norquist plans to study the systems and find out which meet financial management standards and which could meet those standards with modest improvements. Those systems could become service providers for underperforming agencies.
Norquist added that he has no plan to create a single departmentwide financial management system, such as the previous eMerge2 project. "

OMB sizing up challenge in new spending database

"As legislation requiring the development of a searchable public database tracking federal spending heads for the president's certain signature, Office of Management and Budget officials are already sizing up what could be a mammoth task in collecting and organizing the data.

Clay Johnson, OMB deputy director for management, said today that although most of the data exists for the massive portal, the biggest challenge will be finding it across the government and making sure it is accurate and in a usable format.

'The feeling is most of the data exists,' Johnson said after a briefing on S. 2590 in Washington. 'It may not exist in the form and level of detail it needs, and it may exist in some agencies but not with others. ' The primary technological challenge will be to go out and get the data [and] pull it back when it's requested, not to create the data and create a massive database.'

The bill passed in the House last night, after clearing the Senate last week, and now moves to the president for his expected signature.

Under the legislation, OMB must develop a searchable database with information on federal contracts, subcontracts, grants, subgrants, loans and other financial assistance by January 2008. "

Thursday, September 14, 2006

FederalNewsRadio - Ask the CFO - Kathie Kendrick (AHRQ)

"Ms. Kendrick became the Deputy Director of AHRQ in 2005. She joined the Office of the Director (OD) in 2000 as the Agency's Director of Planning, Evaluation, and Program Development where she was involved in developing and guiding the Agency's strategic planning processes and program development and evaluation activities. Prior to joining AHRQ, she was a Senior Health Policy Analyst in the General Accounting Office (GAO) Health Care Issue area. Ms. Kendrick has over 25 years experience in Health Care Administration, most recently as the Chief, Mental Health Outpatient Programs at the VA Medical Center in Washington, DC. Ms. Kendrick received a B.S. in Nursing from Keuka College and a M.S. in Child and Adolescent Mental Health from the University of Maryland. She is currently a Ph.D. candidate in program evaluation at the University of Maryland.

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FederalNewsRadio - Ask the CFO - Gary Reisner (NMFS)

"Gary Reisner serves as the NMFS Chief Financial Officer responsible for advising the Assistant Administrator and agency leadership on the agency-wide objectives, measures of accomplishment, and the distribution of resources among the agency's management units. In addition to these planning and monitoring elements, he oversees the Office of Management and Budget, which provides for the agency's administrative processes, budget formulation and execution, strategic planning, performance management and oversight, facility and safety management, grants coordination, audit coordination and oversight development, human resource management, and loan financing services. Prior to his current position, he worked at the White House Office of Management and Budget where he oversaw policy and program development of the NOAA budget and the performance of the Commerce Department under the President's Management Agenda. He brings experience in developing and implementing government-wide natural resources initiatives including Lands Legacy and the Conservation Spending Category, recommendations of former President Bush's Task Force on Outer Continental Shelf Oil and Gas Development, and guiding development and review of the first Interior Department Strategic Plan. Mr. Reisner has a Masters of Science degree in natural resource economics and over twenty years of Federal service devoted to advancing public policy on natural resource management, and related science. He has been involved with and a supporter of research that fosters economic and politically feasible solutions to many of the Nation's environmental and management conflicts.

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House passes database spending bill

"The House late Wednesday passed legislation creating a searchable database that will track all kinds of federal spending, moving the bill to the president's desk for his expected signature.

The bill, S 2590, requires the Office of Management and Budget to develop a public, searchable database with information on federal contracts, subcontracts, grants, subgrants, loans and other financial assistance.

Under the legislation, OMB must develop the site by Jan. 1, 2008.

The Senate passed the legislation, sponsored by Sens. Tom Coburn (R-Okla.), John McCain (R-Ariz.) and Barack Obama (D-Ill.), late last week, after a number of senators withdrew their opposition and let the chamber vote on the bill.

'This bill will make tracking government spending easier for citizens, reporters and legislators alike. Improving transparency will force lawmakers to be more accountable to the American people,' Coburn and Obama said.

From there, the language moved to the House, which earlier this year approved a similar bill that would establish a database for federal grant awards. Co-sponsors of the House bill, majority leader Roy Blunt (R-Mo.) and Government Reform Committee chairman Tom Davis (R-Va.), met over the past few days with Coburn and others and agreed to amend the House version with the Coburn language.

OMB supports the bill and director Rob Portman applauded the House action.

'The American taxpayers deserve to know how their money is being used and they are right to expect that it be used responsibly to achieve results,' he said. 'This legislation will help cast the bright light of public scrutiny on federal grants and contracts and will help reduce wasteful and ineffective spending.' "

Wednesday, September 13, 2006

Today's GAO Reports

The Government Accountability Office (GAO) today released the following report:

Highlights of the Comptroller General's Panel on Federal Oversight and the Inspectors General.
GAO-06-931SP, September 11. http://www.gao.gov/cgi-bin/getrpt?GAO-06-931SP

Business Objects Launches Expanded Performance Management Solutions for the CFO

"SAN JOSE, Calif. & PARIS--(BUSINESS WIRE)--Sept. 12, 2006--Business Objects (Nasdaq:BOBJ)(Euronext Paris ISIN code: FR0004026250 - BOB), the world's leading provider of business intelligence (BI) solutions, has announced the release of its integrated planning, budgeting, forecasting, and consolidation solutions on the BusinessObjects(TM) XI platform. These new integrated enterprise performance management (EPM) solutions enable finance organizations to create a process for continuous improvement, provide employees with information they can trust, and align corporate resources with overall business strategy.

With this launch, Business Objects has executed on the vision it initiated in 2005 with the acquisition of SRC Software -- providing a comprehensive set of performance management capabilities on the BI industry's most advanced and trusted business intelligence platform. Business Objects now offers more than 30 targeted applications designed for specific industries and financial functions. In addition to strategic and financial planning and operational budgeting, the solutions also cover metrics management and scorecarding, data visualization, and analytic applications to provide a broad set of performance management solutions for finance managers in industry and government organizations around the world.

'With today's announcement, we are building on our outstanding EPM momentum and our 70% year over year growth in EPM license revenue during the first half of 2006,' said Mark Doll, senior vice president of global services and general manager of EPM at Business Objects. "This announcement underscores the focus and determination we have for delivering a world-class EPM solution for CFOs and finance organizations around the world. Our innovative product plans and continued investment in the development of comprehensive EPM products and services offerings position Business Objects well to serve this fast growing market and help organizations achieve higher performance."

Business Objects Planning, Budgeting, and Forecasting Integrated with BusinessObjects XI "

Monday, September 11, 2006

Senate passes bill creating federal spending database

"Legislation that would produce a searchable Internet database of federal contracts, grants and loans passed the Senate Thursday night, pleasing government oversight groups that believe it would prompt improvements to existing federal databases.

The 2006 Federal Funding Accountability and Transparency Act (S.2590) directs the Office of Management and Budget to ensure the operation of an online database accessible to the public at no cost.

Passage of the bill was delayed by holds from Sens. Ted Stevens, R-Alaska, and Robert Byrd, D-W.Va. They cited the need for more time to review the measure.

A similar bill co-sponsored by House Government Reform Committee Chairman Tom Davis, R-Va., and Rep. Roy Blunt, R-Mo., (H.R. 5060) passed the House on June 21, but that system would include only grant information, not contracts.

The Senate legislation calls for the database to host a Google-like search engine that would gather information from existing federal databases, including the Federal Procurement Data System, the Federal Assistance Award Data System and Grants.gov.

The Congressional Budget Office estimated that updating existing databases and adding a central search engine would cost about $4 million in fiscal 2007 and $5 million in fiscal 2008. Another $2 million in annual appropriations would be needed thereafter to cover maintenance costs. "

Saturday, September 09, 2006


"WASHINGTON, Sept., 8, 2006- The U.S. Department of Agriculture today announced that the Denver Financial Center has been selected as the new primary information technology site for the USDA National Finance Center (NFC). The NFC headquarters will remain in New Orleans, La.

NFC, one of the largest employers in New Orleans, is a federal center of excellence for payroll and human resource functions, serving several federal agencies. With more than 1,300 employees, NFC provides support services to approximately 585,000 federal civilian employees. The center of excellence concept is designed to provide economies of scale and reduce costs. The economy of scale of the NFC has saved between $30 and $100 per employee per year as additional federal agencies have contracted with the center.

In a prior continuity of operations review the management of NFC recommended moving the primary information technologies center from the local area due to the periodic risk of hurricanes. The administration and the Congress agreed with the recommendation and appropriated funding for the new location.

While the project team was completing the site requirements for the primary data center, NFC was evacuated due to an ensuing hurricane. Hurricane Katrina required the relocation of staff. The data center was moved to a short-term disaster recovery center. Damage assessment from Katrina to NFC reconfirmed the need for a long-term primary computer
center outside of the hurricane-prone area.

The Denver site was selected from four currently or soon to be vacant federal data centers. The final selection was between Albuquerque, NM and Denver, CO. Factors that influenced the selection included cost, infrastructure, and employable technical talent.

USDA, one of the largest federal departments, supports operations for the USDA's Natural Resources and Environment; Food, Nutrition and Consumer Services; Farm and Foreign Agricultural Services; Marketing and Regulatory Programs; Rural Development; Food Safety; and Research Education and Economics. "

Friday, September 08, 2006

GAO to OMB: Go slow on stricter audit requirements

"The Government Accountability Office recently urged the Office of Management and Budget to step up federal audit requirements slowly, to allow agencies time to first reach stricter standards that went into effect in June.

In a Tuesday letter to leaders of the Senate Homeland Security and Governmental Affairs and the House Government Reform committees, McCoy Williams, GAO's director of financial management and assurance, presented the agency's analysis of a recent cost-benefit study conducted by the Chief Financial Officers Council and the President's Council on Integrity and Efficiency, an association of presidentially appointed inspectors general.

The study and GAO's analysis, which were called for under the 2004 Department of Homeland Security Financial Accountability Act, address how and when agencies should be required to obtain an audit opinion on their internal controls over financial reporting. Under the rules of OMB's Circular A-123, the teeth of which were first felt by agencies in June, managers at the 24 CFO Act agencies must provide annual assurances on the accuracy and effectiveness of their internal controls for financial reporting.

Although most agencies are not required to obtain formal internal control audits, DHS must do so starting this year under the 2004 financial accountability law."

Wednesday, September 06, 2006

Today's GAO Reports - September 06, 2006

The Government Accountability Office (GAO) today released the following correspondences:

1. Internal Control: Analysis of Joint Study on Estimating the Costs and Benefits of Rendering Opinions on Internal Control over Financial Reporting in the Federal Environment.
GAO-06-255R, September 6. http://www.gao.gov/cgi-bin/getrpt?GAO-06-255R

2. Improper Payments: Posthearing Questions Related to Agencies Meeting the Requirements of the Improper Payments Information Act of 2002.
GAO-06-1067R, September 6. http://www.gao.gov/cgi-bin/getrpt?GAO-06-1067R

Friday, September 01, 2006

GAO: Federal Reserve needs better controls over auction systems

"The Federal Reserve needs to bolster security controls for its distributed-based systems and supporting network environment used for Treasury Department securities auctions, the Government Accountability Office said.

Federal Reserve banks have in general implemented effective information system controls over the mainframe applications they maintain and operate for the Treasury Department's Bureau of the Public Debt to support auctions and financial reporting, GAO said in its report released yesterday. But Fed banks did not consistently identify and authenticate users to prevent unauthorized access, ensure that access was authorized only when necessary and appropriate, and implement adequate boundary protections to limit connectivity to systems that process Public Debt business.

'Without consistent application of these controls, the auction information and computing resources for key distributed-based auction systems remain at increased risk of unauthorized and possibly undetected use, modification, destruction and disclosure,' GAO said in its report authored by Gregory Wilshusen, director of GAO's information security issues; Keith Rhodes, GAO's chief technologist; and Gary Engel, director of GAO financial management and assurance.

The Federal Reserve needs to establish a management structure to ensure that decentralized IT security is effective and put in place an application test environment for the auction systems. The Fed also should correct weaknesses in identification authentication, authorization, boundary protection, encryption, auditing, and monitoring and configuration management.

The Fed has already taken corrective actions, including improving its ability to coordinate and oversee its operational and technical environments, and replacing its existing auction applications and operational infrastructure by the end of 2007, said Louise Roseman, director of the Federal Reserve’s division of Reserve bank operations and payments systems.

“We have also taken actions to improve our ability to coordinate and oversee our complex IT systems effectively,” she said.

The Fed and Treasury plan to validate the integrity of the new application and infrastructure at several points during the development of the application, she said. "

FederalNewsRadio - Ask the CFO - Melanie Stinnett (ATF)

Stinnett began her career with ATF as a staff attorney in the Office of the Division Counsel, Philadelphia, in 1983, a year after earning her doctor of jurisprudence degree from the American University Washington College of Law in Washington. From 1987-1991, she served as senior attorney in charge in the Philadelphia office before becoming the assistant chief counsel there and later in New York.

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DoD Financial Management Improves, But Problems Remain - 31 Aug 2006

"AccountingWEB.com - August 31, 2006 - Dozens of Army reservists and National Guardsmen received checks totaling more than $900,000, despite failing to report for duty, according to Congressional investigators.

A separate investigation found that the Pentagon has issued checks to the deceased former spouses of military retirees.

Payment problems are just part of the huge financial management challenges faced by an agency as large as the U.S. Department of Defense (DoD). DoD has assets and liabilities that exceed those of Exxon, IBM, Ford and Wal-Mart combined, Government Computer News reported. Its operating budget is more than $400 billion. Improvements, considering the number of players and layers of bureaucracy involved, can take years.

The House Government Reform Committee has been scrutinizing military payroll systems, asking GAO to probe complaints that some troops have been underpaid, that their checks have been delayed, and other problems. The Senate is also pressuring DoD to improve.

The country’s top auditor, Comptroller General of the United States David Walker, noted progress at a recent Senate hearing. He pointed to DoD’s development of a plan to improve financial practices and its work on computer modernization, Government Computer News reported.

The department says it has modernized 200 business systems, saving $1 million with each upgrade. Also, 95 percent of DoD’s vendor payments now are done electronically, up from 86 percent in 2001, saving more than $6 million.

“The approach that they are taking now is vastly superior to the approach that they were taking before,” Walker told lawmakers."